Clients who have been threatened by bill collectors often describe the experience as gut wrenching. Many say they are left with a sense of dread that everything they have will be taken away from them. Not so.
There are some property items and amounts which no creditor can take, unless they have a lien, because they are “exempt” under the law. While there are many different exemptions, the following are the most commonly used:
- House (homestead/residence): Up to $60,000 of market value or equity in your home is protected. This exemption was recently expanded to cover every homeowner regardless of marital status, age, or whether children live in the home.
- Work Vehicle: Up to $2,400 of market value or equity is shielded for a vehicle used to drive to and from work (or to volunteer). Your vehicle is not exempt per se, even if you are disabled and just use it to pick up your medication. However, any part-time job will create this exemption.
- Tools of Trade: “Tools” used by the debtor in their employment are protected. This exemption has a broad definition and can even apply to a horse, saddle, and tack if you’re employed as a ranch hand. It is combined with the work vehicle exemption, and the total amount available (between the two) cannot exceed $2,400.
- Personal Property: Up to $2,500 of market value is shielded. It can be used to protect any personal property items: bank account, cash, guns, boats, etc. – Any property but real estate. This exemption is doubled for a married couple.
- Household Furniture and Appliances: Up to $1,500 in market value is exempt. For most, this shields all their household goods. This exemption is also doubled for a married couple.
- Social Security: Virtually all government benefits are 100% exempt from collection. Included in the list, besides Social Security, are veterans benefits, and unemployment benefits. If you have income in addition to these benefits, the government checks must be deposited in a separate account, to avoid commingling with other funds, in order to be protected.
- Injury Settlement: Any settlement proceeds which you might receive in an injury case (personal injury or workers compensation) are, except for back child support, 100% exempt.
There are numerous other exemptions which may apply to your situation. However, in some cases, special steps must be taken to claim the exemption. If you have questions, don’t hesitate to call our law office for a free consultation.
Now, if some brutish bill collector named “Guido”, or something like that, threatens to take your house away, unless you send him a check, just laugh and say,”That’s not gonna happen.”